CASY - Earnings call transcript Q2 2018 | Casey's General Stores, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Casey's General Stores' Second Quarter Earnings Conference Call. [Operator Instructions]. And as a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Bill Walljasper, Chief Financial Officer. begin. may you Sir,

William Walljasper

Executive thank the joining I'm quarter Officer. and Chief and here. Casey's Bill to results Financial Chief President Handley, for ended Terry is you morning, also us for discuss Walljasper, Officer, Good October XX.

as our our about to Terry Form statements to report the of future forward-looking filed of available questions to stores. Any or growth website. you XX-K I'll These annual XX-Q unknown opportunities statements with call the results would as constitute information, us Litigation whether forward-looking Casey's results. future may our business certain statements, statements statements to and and Reform or or Private on There intention any factors forward-looking actual then today a performance Securities summarize recent to within to open any are the events also and disclaims from I a the obligation possible for are Act update our uncertainties which differ current number Before SEC or improvements during remind made that to results as and expressed respect investor turn in new at on with any XXXX. reflect views this statements, statements the future Form we result include of over now known during events, of and relating that to by cause on or our this results made strategies, quarterly reports take begin, most our the of second and revise our forward-looking results implied of call forward-looking minutes or discuss otherwise. those by call assumed meaning of other few described may We'll a risks, materially results. afterwards like future quarter, operations,

Terry Handley

good Thank morning, and everyone. you, Bill,

maintain for during strong share The were compared earnings August. have with seen, we of $X.XX year you month adversely to already United year. to Total we of $X.XX quarter Transportation sold quarter per our were unable gallons the was Year-to-date most In peers. which in experienced driven of to sales same-store second States period, impacted the $X.XX the of $X.XX the were us continues compared remainder miles our diluted gallon same earnings the pricing per the this average sales. category, period pace which off the As back ago. softer the started outpace Unfortunately, a share X.X%, during diluted to as the last Department that a quarter sold retail quarter half of traffic in period rose for The strategy achieve gallons fuel retail publicly-traded last $X.XX the to of year. $X.XX to and an X.X% $XXX price compared million. fuel increase throughout of to allowed by reported in

hurricane wholesale the we increase During experienced in fuel primarily volatility, quarter, the due to cost activity. an

$X.XXX per annual fuel of a the at which the per end margin gallon, $X.XXX Year-to-date, margin As was in our gallon. average fuel is result, high the quarter the guidance.

The benefited renewable commonly margin sale credits, known RINs. as the second of quarter fuel from

RINs around are XX.X trading During million the currently to sold million. quarter, $XX.X we $X.XX. RINs

X.X%, same compared year of to sales annual sold Same-store million fuel to gallons $XXX.X Grocery were in the the & last third forward, were quarter. X% the average top Other Merchandise to up Total year-to-date category the $XXX.X gallons Same-store total XX.X% for million. up period profit billion. category fuel X.X% the in to ago to dollars our in grew sales $X.X second of in weather The the the X.X% is October attributable $X.XX. lower going and RINs higher the that quarter, increased multiple the which year believe we sold, traffic quarter a the adverse sold gallons the the Due gross slower due throughout was purposes margin was year comparison which to in sold of approximately For guidance. up for in our the guidance during at quarter, patterns end were to month. towards

same However, in top to the at ago our outpace we the was margin quarter operating average in the market XX%, annual region. continue guidance. our of end data The in year with consistent and the period

X% result, profit in for was to gross a nearly quarter million. As category the the up $XXX

below customer month to August, in We of especially in as patterns the pleased for and the fuel the growth sales from off $X.XX were we quarter, to half of was billion. be up previously After optimistic and our a in current the on has with and major purchase pizza. are quarter the & rollout that the X.X% gallons $XXX up with same-store which customers saver our adverse remodels, gallon per Beginning margin of years. October about new experiencing, weather promotion. the light up Fountain Prepared value-conscious, mentioned the that with how in XX.X%. In the sales any long-term of month. stores category program The we Pizza-to-Pump the resonated sales well a were over back offers off X.X%, fell continued to $X.X this environment with were total million year, XX them the continue benefit currently seen coupon category X, openings. we the starting for X.X% gains drove store recognize replacement in guidance. negative sales For the that were our of strong of total count the affected opportunities was the same-store up We remain most have up large Same-store to for annual December average we year-to-date the Food fuel the The X.X% we quarter. category, kicked program and

this offered areas of past in success. with our have promotion great We the select in market

offer second was for down XX.X%, lessen this we points risen basis year due to As XXX the primarily in sales ago believe and strain from increase The margin consumers. higher recently, our will retail quarter fuel the a an on our prices average at forward The average is pricing, to locked center cheese has cost at the The December input XXXX buy Ankeny per giving enter through cheese into a market for cheese. of in new us at favorable cost. recently opportunity pound. been $X.XX distribution have

We up same-store to to X%. are currently range from sales our through average to down approximately on Based rose of our nearly gross Year-to-date, of we our to with X% of results, X% same-store the pound. food In sales were quarter, prepared revised annual all cheese million. guidance December margin X.X% locked an in at dollars for price X.X% $XXX.X profit have XX.X%. year-to-date a X% $X.XX XXXX per

benefit the growth We our well as the operating X.X%. from were At new encouraged as are platform. long-term programs, and the about expenses in rollout growth store we our of engagement the implementation optimization openings continue digital this to six-month new up area of as outlook price mark,

of was rise a stores For wages the to period. quarter, operating taxes in and expenses ago related a Approximately primarily to favorable increased this the same X.X% to compared million. in increase more to year due XX% $XXX.X operating

XXX fuel the point a fuel million prices expense, we combined and a operating basis to addition, in increase. retail due adverse This fees card had experienced increased to in primarily $X.X impact credit the quarterly quarter. of increase In

year X.X% We higher would expenses been the the expenses of operating Bill of impacted would area of level the approximately like not from continue for previously. to the the by growth of Labor The the store ago, over Operating the from have the Department discuss open included a operating approximately any were mentioned stores year. change to up now turn unchanged card salary second from focus proposed call the continue store expenses the be will make credit gains Store-level numbers up quarter. in fees statements. programs adverse increase manager's impact the controlling in throughout expenses. our to financial by Without to to impact X.X%. I an stemming

William Walljasper

Terry. Thanks,

year operation On same was sales statement, the to revenue previously Depreciation in XX.X%. increased price number billion, a the as quarter to well ago. mentioned was to the in this second of quarter an quarter last primarily $X.X from due up and the increase period income fuel XX% over compared gains up of increased stores in the retail year total as XX%

still We being with aspects received Senate reform X.X%. rate decrease tax The quarter. change inquiries up second the we of and Recently, accelerate of half of basis estate and between we into year revenue quarter the permanent regarding the in in tax reconciled and to this impact potential reform have in total bill. the a the a number provisions the primarily There the to number differences first expect that and the as rate was new the Year-to-date effective points are tax the increase to Illinois new in many favorable up during depreciation due store the effect XX XX.X%, openings. of Casey's the are debated went House. was

as new taking account significant liabilities stands onetime corporate favorable as impact have effective will share anticipate the a becomes law, all at when lower reset it tax rate. changes earnings it new the a tax on in tax However, into currently, it Casey's will our we per deferred

years, tax effective future substantially Going rate. company from forward, the benefit corporate lower will in the

secured due mark, ago generated end for At sheet year, net to Long-term strong. million up balance At were of to million, $XXX cash the in of $XXX.X year the debt, from October cash and and capital $XX.X in $XXX.X at current operations, same maturities, be future growth, additional expenditures were flow fiscal million $X.X billion. million offset period. Our debt the share a equivalents the compared we repurchases. continues XX, $XXX.X primarily and we cash was six-month to million by the from

flows of new remodels and expenditures second during fiscal acquisitions, accelerates the more store our major We on construction increase expect to half with capital additional we year. complete as

progress Lastly, give repurchase the share I of update on would the you like to program. an

At reminder, over nearly approximately of Since we shares. stock repurchased of up the the to a $XX two second the quarter, million. XXX,XXX X.X the for we of have the authorizes As shares common million years. course of purchase release repurchased fiscal program, million the press during indicated of over $XXX start program

to programs. We our update value. to believe our unit turn too growth shareholder about gross I repurchase talk and back to like when continue call important to our Terry providing is the Terry? on now share would program

Terry Handley

Thanks, Bill.

and replacement stores XX completed store opened XX have under stores XX This constructions stores. we acquisition to and purchase. acquired We XX agreement new additional quarter,

major also quarter. remodels We the completed XX in

replacement to agreement have XX XX remodels of we we Currently, this under have major currently new all new sites for addition In builds. stores, stores and XXX XX activity, construction. under

in to our and environment the marketing We increase territory. activity. is the part are also We the continued in acquisition economic believe in by encouraged related this challenges

at Our the store count quarter this X,XXX. was end of

future for well balance sheet strong growth. geography, we our are very Given expanded and positioned

also first a are to we Kentucky. in converted be We of Russellville, part months, locations XX of our to X,XXXth pizza store of format. six XX-hour delivery milestone Growth the our Through excited key continued celebrate long-term programs to stores opening XX to a and format the strategy.

have addition In these major XX to completed we also conversions, remodels. have

are a major to year, that planning are XX stores complete X,XXX of deliver For we us fiscal XXX that XX remodeled. stores that we total Currently, stores XXX the have hours, been have remodels. pizza and open

would program. price each of for separate programs and engaged optimization earnings digital currently our calls. previous clarify phase, X integration order. present XX%, associated addition and pizza At these now bring telephonic ordering to amount continues app of in to have and January. going order our be in to be assessment by -- this program. of an XX% progress higher the that engagement with line compared online we provide online completed Since to assessment on we I In and around climbed road Each each downloads completed is the orders are and to an phase of million. the basket consultant consultants update Total time, a you will time, the the a mentioned exceeded This online program. programs, encouraged mobile which will our our time like development map performance state have through has The of

of We that programs our believe in widen to call at our We buying give insight March. and base will to you earnings opportunity needs customer in customer will habits. more with update all our detail us these better the

the our pricing have related ability remain take also drive levels market the to in year opportunities. to allowing past. experienced will about In the we long-term products, company differences sustained steps than several opportunity profit dollars. The put closing, the to has growth have certain gross We in conditions incremental an we have a advantage at over of that us higher growth we have in taken past years consistent position the optimistic over next unit of and to

existing our both priority. new as in look invested new on to activity we in mind a have with will acquisitions capital Keep will and that return store construction always augment We top markets.

As to drive remaining fiscal the and we look ahead opportunity XXXX have the shareholder of and year the value. part feel we beyond, into significant in fiscal we long-term

now take your will We questions.

Operator

Instructions]. first question the Higgins [Operator of of comes And line Bank. Deutsche our from Shane

Shane Higgins

on how to quarter guys the And kind throughout called in far are the traffic how ticket help running prepared average I cadence, of Obviously, and Can pretty weather. guys was thus and in strong you circle just doing back third Just you wanted the are then out kind the us foods. October, guess, you of understand quarter? you August. was

William Walljasper

question. that Shane. absolutely, Yes, fill go I'll and

certainly above current of Grocery the higher recall, end the last performing at strong we we And in what were you did Other guidance that we of towards August. earnings Merchandise Foods consider Shane, trending we & to that At Prepared In at And certainly certainly the out were of month time, called that right. as trending that time. gallons August and both some be the time. exactly month relatively the comments may You're were range. call, the make

And so October the month was callout kind as as really kind the far through the downward quarter, as we there. the of trend of move the of

alluded on basis customer the we same-store to, month a As negative we had October. count of in

-- weather that Terry One adverse was patterns. had of the with comments do to there made

XX% of majority of weekends on what rainstorms. affect the and That October, thunderstorm the may weekends area, month a sales customers of basis. about but the to you throughout that will half run and like short-term when roughly a not our because And us patterns, there. don't so to activity the sound experienced pattern, have that in weather we and referring on And weather our significant we're severe the that's pizza of get about just through out

And October look we the so anomaly all your when of that at Did questions in it. Shane? month was there, the quarter really, was really answer the that of kind

Shane Higgins

Did bit But does you stabilizing, little Well, to remainder the guidance better down you -- for launched. indicate brought you guys of you then back a mean, for guys you the additional hit the -- that your comp. about confidence promotion for the give comps some midpoint year. guys at full And even that seems maybe least the the so can that just I talk guys imply guys of November's obviously, it are slightly the trends that that the range new year beginning half?

William Walljasper

I at, this QX part latter I of quarter-to-date and I is the kind your answer question. think of of trending think kind your here And Yes. might quarter, where we're question

quarter Foods, that to And week we results. are about respect our gallons, we and mentioned with second that guidance Merchandise promotion be ahead the General So to the Terry just Prepared kicked with ago. Pizza-to-Pump With just fuel trending off respect quarter-to-date. of one we how we finished line in growth in would again,

Shane Higgins

the obviously, margins Okay, then Prepared on mean, Foods. just margins, a were great. bit down in And I the

margin the did quarter guidance year. You into as some we guys to of reaffirm some and give you for puts as just the the back this look us and kind color for takes half? as Could

William Walljasper

gray the unknowns year areas time, fiscal the in into that on the December cheese one half at locking was of back the we're through fiscal or Coming year, of really our of sure. point kind Sure, the XXXX. because

it that the we at mentioned, as our environment, cheese we to of we in back cost year. so able when favorable, lock half became were the were pricing And fortunate

still keep margin that the the guidance of equation. gives intact on us that some side to So confidence

Shane Higgins

in to competitive pizza or any call changes food of other from Any the your competitors? prepared of of out the environment terms chains any

William Walljasper

would I what call don't quarters. past relative called we've in think there's any we the out changes that to two out already

competitive, it stable but We landscape. it type want still call haven't Obviously, that. a competitive, remains if to of any seen acceleration in competitive that you kind of necessarily

Shane Higgins

kind it. of got just of it, one Got housekeeping. And kind

that you were unit that me Is the reflection up the year. you just uptick for in inventories? half help understand inventories have guys of a the Your the the back growth Can about of XX%.

William Walljasper

the things One be Yes. We would there. had There's increase cigarettes. really a in cigarette. two price

rise fuel. saw you significant with so also a there And the

in well. rising would as category fuel, With the you see inventory the that

Operator

Our question next comes the of Gilligan from Ryan line of Barclays.

Ryan Gilligan

to So price you out? do on optimization to these had and opportunities start And yet? initiatives size engagement the projects, can you the when digital have enough time roll think

Terry Handley

Yes, Ryan. I meeting roll-up folks roll-up first the I -- in This Terry. first optimization be of assessment with price later digital is the actually the team with And think we here the terms meeting yesterday. first our the just in month. will those mean, have

ready will in actually, discussion planned. at you So we're end right of tools the off And the looking clarity what here, to we're bring want We to more here call. on actually that where have to call indicated have us see certainly, we forward you may understanding like. get January the to to not that And or through QX going required so start. share we're and some of what with an future what far the be will we we've as in the exactly is plan work platforms look certainly

Ryan Gilligan

the year? fair. cadence That's of And of it. how rest Got we for should the unit about think growth the

William Walljasper

Yes.

the XX X/X construction, the in anticipate fourth that quarter. we stores about of Ryan, under we those, have roughly So closing

in X/X coming will so here And QX. -- obviously

say the in I would into most have ones agreement the those on push fourth as right bubble. -- that acquisition, the our we would far quarter. I As kind that's

half back the the be of definitely an in there So will acceleration year.

store have going least as at of the somewhere rolling acquisitions close roughly anticipate opening through. So we information least presented, XX we constructions. to to at XX that we're new to And fully be

Ryan Gilligan

you that's changing doing tax it, helpful. potentially Got your And appetite deals? for can reform larger anticipate

William Walljasper

an certainly, acquisition. Well, look large, it benefit sits small appetite always that's we us. whether or to certainly have any now, of the a to type reform, be to as stands at And tax

XX rolls out That kind And seeing possibility. uptick many along the years the would right to selling last how M&A willing a pace. this what and same so combined a in have we about M&A a Right type people have now, environment seen final are have comes and acquired we XX strain more But alone obviously. evaluate and definitely have indicative We in up of together. by talking are I certainly, for Senate. bill stores say reflection business. under front, they about, And is that probably an we'll two the are feeling the it's -- that reported That's they of House we've we the been activity. certainly, we their we of agreement. fiscal certainly is to conversations need believe that that slower from

So area. we're encouraged by that

Ryan Gilligan

makes That the card then sense. fees quarter? And credit quickly, for just

William Walljasper

Yes, $XX.X the credit fees card were million.

Operator

from Our Bonnie line Wells next question is Herzog Fargo. the of of

Bonnie Herzog

to margins ability your want you stepped-up wanted just mentioned. did the Food on to Prepared the pizza back hit understand that circle really just to your and promos your thinking the context about guidance that business I of you I maintain. targets, on So just these

trying margins. maybe could that the to last in could of So to the through the of understand that. margins, negatively what in works, year, just couple I quarters that might the just impact for in possibly that think have want you And on other initiatives impact have kind your

William Walljasper

Yes.

couple of for margin around you, thoughts a Prepared the Bonnie. Just Food

certainly this I cheese remaining part are the into we mentioned, for fiscal of year. As locked

will that, variable stabilize to comes by it encouraged the probably food we're that and the when So prepared margin. biggest

in in a the we equation happens basis, that meet tend the obviously -- -- demands patterns end scheduled that so like on high up to of repeat in every to obviously, have happened The sailing. was when us our second the weekends the we our have on one just are other that the things that the a we the customers. we product And quarter warmers and of We activity production have of of that month weather that hit to October. demand about side affected week planners

a bit coming was an little of there. there through So anomaly

fuel. on we think on. actually on point as we the Pizza-to-Pump are that to well our opportunity to the your in with into So mind, is accelerate coffee we promotion, keep summer. question that have from But respect coupon locked Also in for

the And in cost run through that sold category Prepared in margin not will Food the category. goods of the so fuel

Bonnie Herzog

right. all Okay,

if So just -- what you're that still feeling you'll on pretty confident mentioned? the margins will darn -- obviously be based them achieve you

William Walljasper

that. the we Yes, unit based the of know today, we see that higher so change maybe And on units is growth year. if -- now, obviously, little didn't than through talked just the also about, information of that maintained around other XX. to side the math that some you Yes, tracking a that we XXX, categories, we reason right at low for go this bit we're a

we're well. the higher So that's one as fuel towards end like that the same holds pushing gallon guidance looks The of on true guidance. that

Bonnie Herzog

XX Right. there. to CPG. I your the imagine margin Closer the of you're on end upper guidance

William Walljasper

Well, we're well the yes, upper by gallon as we same-store certainly end movement. obviously, what the on as reported, there

-- we we think trending the I mentioned same-store conference guidance above as are call, through at gallon currently. of this least as the

Bonnie Herzog

some that, might little on beverages to way, drill traffic further little just in of bit Right, softer the of course, categories. provide I okay. mentioned? mention, then tobacco you occurred the key on performed. that And business the I cig a any could your if on did bit more price of and impact have you have packaged color did if wanted down increase it, a but how merchandise you And see could any and you missed some

William Walljasper

traffic softer business. when have it traffic there. across we will causing of low our that's permeate of single a we I or Well, does lines And negative, whether pattern, digits weather slower this, the even it's all more that's right the say think

results the throughout of hadn't those And there the in have anomalies every month business so there. been say, somewhat line it our reported I takeaway of October, for would higher if we of would

and to General we Part category, that your Merchandise the that picked in what up with also we that we call of to we shipment we market similar with So what believe to IRI, -- you category. question believe data, just you have within the this data market data. have supplier to is may comment do made get reason Nielsen share gaining that's respect we're that growth down a drilling

And so dominates point conference that above all which and to we one category. specifically, things you out obviously are us merchandise grocery of trending that's the beer in of cigarette more been. probably how and category heard general the category, calls the too talk promotional the But past in the about

quarter, second in the we we in promotion of a went -- the think off late Here started activity. I second quarter, lot those

in so seen uptick we the category. margin definitely And beer have a

Our liquor well. are doing exceptionally sales

We some That be stores. we add of -- a the continue to opportunities that in liquor our seems in to for more to younger consumers to trend especially look have.

And to so liquor look the for continue that we have. us offerings increase to

Bonnie Herzog

had do spread. traffic, which just then you you locations, just then the on think a of to to the that mentioned pretty widely stores it And really final trying understand that's I'm But again with question your the with lot and one Okay. weather. weak

So maybe better. just wondering curious of if your a did of the in pockets portfolio. give maybe areas was patterns see weather sense across you traffic or traffic could if you some any growth I'm us

Just trying happened an signs you're really what of to seeing and if of understanding get improvement.

William Walljasper

Yes.

the weather us pattern Typically, states months, represents those it's it talk probably XX% most, rain as winter and for you Illinois, if rain. might The are three impact that's heavy region. -- to about magnitude When our at the that us. of the That store northern for on the of especially and part base. it be that can would storms broad get seems falls the falls the hit. Missouri know, be a the about our So sweeping to where of weekends, and weather Iowa, impactful odd patterns we in would and rain weather isolated

So this happens little when bit further a be -- sweeping. just would

Bonnie Herzog

just the so this in better you're quarter? right, feeling far patterns about next already All and traffic

William Walljasper

the Definitely, of upward moving from October. are the Yes. traffic patterns month

Operator

Ryan Blair. next the William Our Domyancic of from question is line of

Ryan Domyancic

begin growth, Food the the affecting again, which range high at traffic, gallon has not end seems So about the Prepared pretty the for but you the for a But of traffic past talked traffic proxy negative been two good quarters. the with guidance side.

growth Prepared can So issues us I that reconcile been you Food understand the expectations, some gallon store there's help comp? with inside meeting has and guess, why but

William Walljasper

lot going gallon Yes, on Obviously, there's in public in probably our transportation. a really alternative there's the for of things area. area, no market

continue have to customers So and to to from go work.

do that's to that or stores saver we have add share conversion that's inside. And out. appears type think, than market to coupon, store. kind of But of promotion. to Obviously, pizza, force to future is respect thought, a us. locations to Ryan, order buy we've their which, in as transition key have But that I some continue gallon so, just redeem We one I for taking also to of helping of mentioned, they coupon large they'll program Pizza-to-Pump to And fuel coupon, that a customer a inside the they in that into in the different is at go a what peers noticed the date. store have of be the that so beauties some redeem disconnect that one other same will get our same-store come movement with

consumer to sales just additional points some to trying the with more of beyond and convert store fuel. create touch the above we're inside type into So

of process promotion. one behind that the that's thought So

Ryan Domyancic

progress you've results in then, the And the growth OpEx demonstrate for made filling two quarters, that to helpful. date that's right, but OpEx the past All guide reiterated. was

would that other are costs cost salary backfilling or you -- maintain there slow increases and you're any of kind growth in that trajectory to will As that OpEx December, current the the cause its got down? manager's lapping be that

William Walljasper

or of ask asked yes, expenses. I cadence obviously Well, of things we and operating more mix think that about, rollouts, think store add might the to new will stores about question into one obviously, so about somebody and Bonnie more the as the the add

might that move that of be we whether guidance the We that of one that's will And be discuss of perspective, end cycle Obviously, from now to the that Once a approach little guidance. did conservative of things so just over especially those a same-store a down. trending cautious probably things. that but there. Labor, trying row, we're we below, or maybe should Department in a bit for actually we low to the not one take quarters Prepared guidance slightly little bit two of our having Food after reduced

Operator

Irene our from question Markets. of And of Nattel is RBC Capital next line the

Irene Nattel

activity sort have or around might of commentary your above really pizza income because to beyond likely year, the that pump having as consumers. F 'XX. about behavior just planned been thinking get change and again Just incrementally, get for promotional this is that you that value-conscious not linkage, with what either of into Wondering sort depressed once and we at even in-store farm to

William Walljasper

this, remainder the Yes. I we a fiscal year. of have of you throughout will tell activity this series promotion

As to to want into to think latter about don't We fiscal We start value-conscious we frame here. we any our to the very ring there near But might term. promote customer. up. type change Certainly, talk up not in about this tend of give get think advance. forewarning we'll that is of coming true fiscal 'XX. a -- those comments competitors that's year, the We going don't part what and definitely, just in your

time, And inside to so we stores. of to propositions for ways looking drive the to consumer, at about them trying value our some the are same bring

activity promotional of about. kind what is the that's So

to Now comments will that into we as digital side think really fiscal off to habits on rather specific I give our territory. and entire insight individual that ticking as start buying a some head blanket throughout keen that that and customer point, go engagement that at just of have the think we we a corporate than would that earlier 'XX, I consumer promotions promotion can, that then Terry's us at behavior look when well,

Irene Nattel

And promotions? at Absolutely. to lot drive your a top loyal presumably these most your effective initiatives customers, geared strengthen again, more the through really time, line of same are but

William Walljasper

right. exactly that's yes, Yes,

Irene Nattel

the than guess, been get results be is implemented gains, to you've I the have that trying you the what date, And questions, just OpEx was at the on that words, anticipated? you programs Okay. last other the really was, larger better at In it OpEx are of already than expected? than bigger asking pie sort they of who was what I'm you've side, trying get I to disclosed? this. the to But guess, size fellow Could

William Walljasper

this on it that the I'd have we have quarter mean, pro of several the fiscal out not way. out and fiscal that quarter results once just to we expected, we've our part in really forma last the are characterize that rolled reported, here would rolled as I I happy but -- one be that The we that changing automatic tactical approach through we as some you days. is hour more did first of performing QX that XX we was of $X.XX expected. in That have the Yes, a walk that, was Also, and spend. an our QX. raise after advertising result those. and taken did we

You did might in we XXXX. recall that advertising fiscal increase pretty significantly

out things have advertising there is to back now, the and believe where at. down right in the of an I that to that just so was will tracking are expected And Several half year. impact spend track think we it

of X% I we establish last a kind in kind increase call, merit a target. As of the did mentioned

like X% you at which to As is pretty recall, prior to seem tracking may movement might not this big X% merit increase, a we X% but to a been X% number. a have lot, a about

through kind scheduled, to year company benefit. takes the tracking implemented right mind least benefit. we're of same say, full cycle what in they X:XX. worker, When where -- they're at hours. X:XX to that clocking time would of increased the focused end call it really primarily of that them characterize to It everybody that day, I so at date I'm has in, And in clocking that a recently be see in we one We Now at clock it clocking is full that it. think on just it the side of keep here simply an as hourly in out, going a that we'll everything, the might anniversary But in, to on course see is. employees takes the hard focus let's paying at X:XX, that is, labor come unscheduled to put have the

them when so anytime more check there focus scheduled. little than they're to and And sooner a allowing in not keen

the got ground. just that kicked So off

here obviously, fiscal And moving through Also, pay a there We hours differential that customer quarter. QX not when has revenue for be at you're back people hours. in great benefit fiscal the several of I know the in us. be will the seeing the differential quarter. hours. job pull shift you're So pull a that a having And slower look X:XX store some a of we the And we a.m. shift maybe pace opportunities done that hours. made a and of then might is have second in We in to a change back that budgeted here our just that forward of one things taking traffic, operations the

that's are that down. you're probably biggest seeing so And tracking, the unchanged base we come store reason

And a calculator hours the that, there's well. things at like and look so of continue number to as we budget

nuggets you for So just a there. few

Irene Nattel

likely A basis, proposed being a helpful. That's question, if would tax it I one of XX%. And really final lot said may, are just in reform. blended on come the on around what

I twofold. is need it, as one, tax as down in level? your mix, XX-ish mind? we state there from, let's now is really sort is the it right else keep that Or question and until two,, my XX simple level? is the So number rate on call your taking of take rate the something Number based XX, level And to guess,

William Walljasper

you we all takes give changes the your these first some potential granted just here, blended adjust the for rate different adjust is you mentioned. basically changes answer what move that and for could when reform, things, To but part, Yes. in tax and

XX%. right around tax now is Your effective rate

tax a X/X/XX how mentioned I has XX%. my that the you or effect, to onetime of it's I comments, give to in reset be to when And as XX% going range, somewhere I'm then the think is opening opportunity the liabilities. they reconcile going the in of kind effect, be deferred whether that. -- know it's be Don't it to in going to

think income pretty a million the of hit that, you a about reset basis. $XXX statement onetime a that's when that there so on And significant number. That's will well over

Operator

Our question Bienvenu of is Ben of from next line the Stephens.

Daniel Imbro

actually Daniel Ben. Imbro for This is on

it's discussed, did Prepared I Food been guidance. start know on want but So the I to if don't

of pretty back pretty through implied indication in seeing great. range the there back why wide. for any the a half are year, halfway implications Prepared comp is of we're Is range the color wide be -- looks still half the in would that the guys kind are the an Given you your volatility to be Food on markets? Or

William Walljasper

Obviously, pretty the predominantly an a range to accelerate still of it's from at. Yes, promotion. there's Pizza-to-Pump because we're opportunity wide where

And range in it this so we at at decided keep to point larger a relatively time.

Daniel Imbro

Okay, great.

controlled. wage management some turnover OpEx with So a decreased The meaningful here. been retention talk labor kind of reaction has of kind of well Have Can any about employee the to there been employee bit and shifting change you gears changes? little increases? those and your

William Walljasper

a we've that's No, of that's changes But we to question some have but great about. that concerned of something we're haven't we spread anything, we made. seen one a get and question the larger significant that's type now, any going seen because operations or were consequences we over when at common hours a to pressure that maybe turnover we Right store store concern it any want But obviously, person. continue don't and like adverse start unintended creates or cause I on on question. reduced additional managerial a from strain certainly reducing hours, especially puts to staff great that monitor. to mean, haven't

Daniel Imbro

if clarifier. one could, then Okay, last of great. me, And I for a one kind

called at card we're the the If quarter. in OpEx fourth growth fees. XXX I you out I think heard bps credit in right, you

Your rise? XX%, see that OpEx card prices X% credit you to of assuming of are continue from guidance any we fees gasoline to if growth contribution

William Walljasper

year, area a in up. will spike the see you that's fuel Obviously, of if great back one prices that that question. Well, significantly half rise the will be

million credit fees it's that so fees, -- our there. fuel so would mind and our of fleet, card to referenced, credit we that that expense own $X.X that combination And in twofold a card be run there's keep

Operator

next Our of BMO line Capital. Bania of the question is Kelly from

Kelly Bania

It Just big a big possibly Prepared beginning weather. X%, guess, factor over pretty seems the maybe the is and to curious tracking just the I of like there. comps. Food flat on swing weather But it sounds October. for negative the quarter in a was like

So comparisons, kind any And weather how understanding signs look just or any price curious depend there's on does to any if going is looking also, of then at it just within Grocery or that really is. consumers' into historical if sensitivity down at where Prepared other trying get you your mindset that of else much anything went on, of kind up the or compares category? Just of how are same conditions analysis versus or that think Food, trends trade patterns. market and the an seeing you the to different or trade you

William Walljasper

the correct. back Yes, those Prepared me and I please try the mean, answered. all to certainly I If Prepared Food missed you're on But August month that. Food get trending of in for I comps, circle X% Kelly, one, Fountain. north were of to with with respect we

into -- really moved almost really of so And right of the September of and started half the back kind entire October. month

weekend impacting us, October incremental knowledge other we of that no looking We already factors month So the whether that to best that -- of understanding didn't of that factors there's were August. impacting weekdays, or started nature, at other days, that we see did there us. our any were September felt in are we the in analytics either things the

so all about I step And on the to XX% Take inside of XX% mentioned, sales of all happened pizza a the happen weekends. of of as our sales it our on XX% further, weekends.

time. adverse short it have a you the for impact events So especially would those in weather traffic or any affect patterns time, impact of on when will matter, have periods period significantly higher of that other -- that

look And that's that's about, kind so a of so at at that up. in data, increase about the rolls you talking we talked three when you you're and precipitation, when look it across when almost significant -- XXX% major of kind states the how

reiterate your half to Kelly. you the of have back so might And for question, me,

Kelly Bania

also Grocery Just prices. cigarette Food curious you think some up, category Prepared -- trade price you in the down? of the if category, the trends same within I are you sensitivity, terms mentioned raised versus seeing trade

off, falling increases price some think, of food are in I prepared just, think the November. I

you about signs consumer of kind accept about and prices curious those feel to just willingness So how and your those.

William Walljasper

our we that off right, you're No, November. in price Yes. fell did increase

value-conscious a of more XX It's strained. to for respect And But cigarettes, over So moving packs move gravitate increase commentary more that people continue to those seeing, certainly months. we and that continued the price are instance, than we to not consumers purchasing. obviously brand the to XX packed that cartons signs a With continue we last because last the type remain continue that and like are gradual that premium value -- chose a to been to we gave. brand. more of to of see have that definitely forward slow over the some trends than towards to

some basket was ring where the have there. the excluding consistent -- past store, Now inside in is that to quarters, stabilization we the it fuel, three so relatively

as we I encouraging. head an there reports think upward out in Farm income, there they into is 'XX. expect some that income farm that's the from USDA movement calendar

but overnight, for positive turn all those signs Now things us. don't are

Kelly Bania

if year sorry, last Because missed very you I'm that. quarter-to-date I warm had did I don't the mention I And comps -- where November know a and are? you think the

with dynamics, cycling just that. was I all those curious how So you're

William Walljasper

That last good did. Kelly. half memory, was first have was the Actually, year November We unseasonably warm. of a

And so pressure. a there was little of bit

That well. year. of with in have weather might Food strongest think might Merchandise General the had as unseasonably year, month first was comp recall to the the strongest growth last of November November. You making month year have about been I do part very A high comments some of the our Prepared lot the

And November we year, this some weather. November in unseasonably Now the saw, -- of changed. back back last half year warm the actually very half of actually

in be in half to certainly, November. far, seemed of December, pattern back the And saw pickup definitely favorable. weather a we so So the

numbers, asked think you question I about quarter-to-date did? You a the

Kelly Bania

Yes.

William Walljasper

our and and Prepared we Merchandise General fuel in The the similar commentary In we gave quarter. category, trending we quarter-to-date trending what in guidance. above finished Grocery second Food we quarter-to-date on a the are the category, are

Kelly Bania

those you're I if you prepared the category food fair? comparisons. so in Would be improvement, cycle Okay, guess, continued that expecting

William Walljasper

in Prepared be Pizza-to-Pump anticipate that there, in Obviously, movement. would we fair. only benefit not the certainly Food promotion, the the Yes, also gallon a but category,

tailwind recall a did will that here forward deep you resonate I going addition, look with some point not that quarter a fourth we at the ran discount from promotions that In customer. QX, might we in some when that in had impact adverse potential out you

And so be as the into we we head comping against lighter of numbers will back half the some year.

Kelly Bania

-- this from And can expect something -- you margins? impacts what help in of results promotion. Pizza-To-Pump What that mentioned elasticity tested can we understand it fuel you've you kind you that, of us terms your and from what learned how like

William Walljasper

Yes.

we think, the this state back back saw we time reason it last was I change. the So of to in obviously, in did XXXX. the And state back we'd was, it the of behavior Indiana we in then, Indiana that wanted

Prepared and to in impacting brand category increase more presence recognition. so we wanted our And that get Food

a probably off. it Comps the a we XXXX drop for the to So so period continue unchanged of wasn't in of great is than more from that to were shut after comps off, Indiana. ran success. relatively though, be base back program takeaway The robust we it in takeaway positive with time state store the those short Xx X higher that

what was intended So did I to think it it do.

we're in our maybe where thought play situation of change or processes trying of the we're now So value-conscious a to consumer some consumer. up on behavior

the opportunity not as selected gives have to point, that retail answers still as what that the proposition. big margin fuel questions, of us does the But we're category going proposition, A program, to coupon. do of to leverage have the strong the order recall And the me so both I with business with at the as has this impact have on see a category. the and the fuel about be which And is obviously, over saver back this inside that. the it together, coupon, leverage push see recognition. side. think If program would gauge At decided, understanding redemption rise, in do an the of years for of in XXXX, as as nice value fuel would fuel we earlier mentioned opportunities consumer your how the idea we to just customer the of hard might to to rate it to of roughly resonated the about store, try I we to to brand pieces XX% coupon. Especially we our about pizza we redemption shift be this well one one do that sale of in because maybe be our several a things an we impact consumer had a prices kind behavior has it point, of the lot in let's aspects more corporate-wide, redeem to the

Kelly Bania

And helpful. one then more. very just That's Great.

tracking Just your relative the how wanted stores how and performance that's of to you've opened expectation, how that's ask new far smaller and going. many to the so of then about stores,

William Walljasper

us. revenue ramp-up. relatively but flow major Yes. Well, our the for ramp-up monitor movement as expected of three only stores cash are in closely, We that categories, not trending looking at of also all of

store that sure that With the needs we design smaller -- foot that to tweak stores customer. our seen with about square continue we're doing look continue This smaller that think obviously facility. respect of you're fiscal trying to always year, discernible X,XXX-foot the change last the think about We I that haven't to for X/X footprint, of so any meet program. would opportunities. to we're pause And asking give in -- us I make

Operator

of James. question of Ben Brownlow next from Raymond comes line Our the

Benjamin Brownlow

fuel to the fuel better link kind the pricing the strategy changed past of You months that mentioned bit from you the strategy plan around you little over that Have on trying my running? and I'm the promotion a conversion earlier just all aside get on. coupons hands pricing at issues. few

William Walljasper

characterize the few the movement I gas. changed probably as over months. competitors an it the we've on movements increased focus wholesale that and focus of I on would increased our say last would of

fuels. call, we our man hire -- to mentioned a Murphy a As in come opportunity had be did young conference we the last to great in to director of from

area. sharper It's has kind the the that continued I would probably -- we changed previous of just to -- -- in on related other a one point. things so say, some the however, certainly at that that of he's mentioned it is strategy focused And I brought area. gallon And this answers. light of the definitely with movement

Benjamin Brownlow

Okay.

it's fair So say... to

William Walljasper

this say about price would I optimization, when Ben, part though fuel that Yes. Terry of talks is that program.

And see refine, something so we if an opportunity. at are there's to that that's looking

Benjamin Brownlow

helpful. that's Okay,

And so being -- you're around little being bit active -- effect, in you're markets to opposed on just a you're more to price? more lead following some in as those active trying of

William Walljasper

that sure call the lead be should I'm the not responsive issues sure to we within but certainly category fuel are by I'd demographic. price as it changing we make as

Benjamin Brownlow

you years. think of on months? reform, through about out also, see do of you over kind expense, kind the a historically tax the should to we the the to just that that an That's keeping savings playing or in your even as of that passed tax has how given tax the obviously helpful. -- expense and that passed XX% And And how prices? XX% given be expense, impact to past thinking industry of the lower and cash been see around quarter kind onetime tax consumer Do through XX being few the also would that's deferred cash over reset just the but tax, and

reform? the about given how think that So should we

William Walljasper

broad environment here Well, the is never of March to retained respect market probably in and Ben, sweeping cash you levels. in. really their here that the not about least the with for pace exactly out, can't that -- And there Ben, area, if the be until have know It to time with to tax area people question, on. move you going opposed it play But had operation. other guess, call. those how lot But we're my sit type about we will to great I now, question. or forward. I be as play corporate at at so conference a slower that we've completely and think kind question, that's the are I it not. will be through bill Especially likely in consumer as we passed passed tell it follow-up questions, change, out -- our retain of -- A competitive and -- tax for you to economic when be through a the our least pass have But of might at your -- company. the think believe, in the may a will them landscape be market to right whether this the

Operator

Anthony Lebiedzinski & [Operator of our next Instructions]. the question from of Company. Sidoti And is line

Anthony Lebiedzinski

All right.

just at Prepared in [indiscernible] I So Fountain you that looking products the or When was Foods was that for any versus it again divergence same-store between consistent? was and pizza segment, category. other there sales notable

William Walljasper

out Anthony, I several got there. apologize, to cut you times

So question. your really didn't I quite hear

Anthony Lebiedzinski

it. repeat I'll Okay,

consistent performance at So there? category, just was was were other the Food your sales it at the within products if Fountain looking pizza sales divergence that there between I look versus the Prepared category, or and to some

William Walljasper

three was reference, look line by of -- I other impact if would adverse rolled categories you And way and on all those your more categories. be your out, at categories, a would bakery there say the just the that other definitely than category. pizza the Fountain

Anthony Lebiedzinski

it. Got

are also, And great. before expand your doing you to mentioned And liquor that. sales there's Okay, plans I that think well.

do many [indiscernible] [indiscernible] your say have liquor -- within sell more just your actually to Or mean was that offering stores So is stores how of liquor? -- and also offering nowadays? you stores it

William Walljasper

looking product the answer mix with add stores to would that existing line The stores. more as product opposed there be changing Yes. inside to a

I'm less told, about a excuse than little XXX, stores sell X,XXX me, roughly have that -- being X,XXX We sorry. -- liquor

in. And hundreds so state-by-state are basis. of like a be that and guess, But there, put think opportunities will I opportunities hundreds that liquor to we we'd there

Anthony Lebiedzinski

And say that switching sold issue the down some gears, RINs looking going okay. XX.X% whether quarter, timing at it, some year-over-year versus the else then actually the something was of Got was Can XX.X%. or basis just this you number on? in

William Walljasper

at at movement a this No, time. of I it see time. -- a to difference just fuel was just nothing particular necessarily a probably issue. out but point huge that timing that don't wasn't I there,

Anthony Lebiedzinski

it, just got And it, a then question. housekeeping Got okay.

So store plans, we as should update for QX models? that as about and when anything QX we far think closing our

William Walljasper

the to similar But would might to close, that that aren't you close. always or one year. opportunities guess, at give able I run or won't on a to forward-looking performing be comments anticipate we be rate But close I Well, replacement we to stores stores. might last two store to we look stores any, that we have

Operator

And the session to that like back concludes Bill for Walljasper our closing I'd Q&A any for today. call to remarks. turn over Mr.

William Walljasper

everyone season. Well, like joining families your I'd I for questions. to great great of us you morning, all Thanks. and just thank wish a holiday this

Operator

for program. participation and Ladies you thank gentleman, in conclude This does conference. your today's the

a day. Everyone, have disconnect. now great may You

Casey's General Stores (CASY) 13 Dec 172018 Q2 Earnings call transcript